How Silicon Valley can kill your startup

Above: The Vancouver-based Picatic team

November 1, 2013 1:03 PMJayesh Parmar

In the last year I have lived in San Francisco, Toronto, New York City and Vancouver, where our team currently resides.

Our team comes from a small city in Canada, called Saskatoon, where startups are few and far between. Dealflow, angel investing, strategic partners, mentors and basic startup information are scarce. The angel investing group that once was has disbanded, and is just getting started again. The fabric and tools necessary to scale, be disruptive and understand the true ideology of what it takes to build a startup, dramatically pales in comparison to the ‘Valley’ and ‘Alleys’ of the world.

It was evident that if our team wanted to build a start up, grow past a regional market and compete on a world stage we would need access to a combination of mentors, capital and talent. As bright-eyed eager founders so often do, we packed our bags and headed to the riches of Silicon Valley.

The energy of the ecosystem in Silicon Valley is intoxicating and energetic. The world was our oyster –– with over a million dollars in revenue in our local market, we envisioned our bootstrapped startup would be easily fundable. The first shock to the system came with the realization that our company was a “me too” product in a market full of dominators that were well funded and had, in fact, gone through multiple rounds of financing.

The sobering truth was that our competitors knew the processes, and the basics of how to put together a deck, executive summaries, and more. They understood the importance of ESOP and how it can prevent an option pool shuffle. Honestly, we felt like middle school kids who were late to the dance.

We needed to learn quickly, and could not have asked for a better place in the world to get educated. We are indebted for the time we had in the Valley: It was an environment where people genuinely want to help, educate, empower and where sharing knowledge is a pay it forward custom of life.

The lessons we learned from the Valley equipped us with a new foundation, toolset and skills required to pivot and launch a disruptive product. With this new lease of knowledge we were accepted into one the most lucrative accelerators in Canada where we built the first crowd-funding platform for events. As a result, we created further traction, acquired additional mentors, raised funds and continued to attract talent.

The Valley wonder dust has settled, and looking back, I realize that it was actually quite distracting and limiting. In fact, I would argue now that it is the the worst place in the world to run your startup.

I know what you are thinking: How can that be? I’m not slighting the Valley for all founders. I found that it’s a great place for deal flow, relationship building, founder dating and idea vetting.

However, if you are a seed stage company post-funding, take my advice and get the heck out of dodge for these reasons:

Talent War — You will need to hire talent, and there is a veritable talent war in Silicon Valley. You will need to compete for engineers with Facebook, Twitter, and Google, which offer heated toilet seats, lap pools, napping pods, executive chefs and of course salaries. It’s a hard sell to bring people on board when you have to court them with the luxuries of a ramen-filled diet.

Money Pit — A company’s burn is their oxygen, you die without it, so not spending the burn on living expenses means you live another day. The Valley and New York are very expensive and finding a decent rental space is another war!

Free Cash — There are a lot of startups taking full advantage of their state/home/or country incentives. If you are from a small town you may have to leave it in order to chase funding but you don’t necessarily have to relocate. In Canada we have incentives that give startups a massive competitive advantage.

Distractions — Top ten lists, meetups, conferences, hackathons, demo days, the list goes on and these distractions are in abundance in the Valley. The only thing that matters is staying focused, building a strong team, disruptive product, traction and going after a large market. My advice: Work on product, raise capital, build users.

Our travels taught us that the Valley and Alley are the best places and the worst places to build your company as they require a lot of burn and can be distracting.

These locations do have some of the best and brightest tech influencers of our time and provided our company the foundation required to journey past the crash of ineptitude.

However, after you’ve raised seed funding, you have a limited amount of chances to get product market fit and scale. Take my advice, find a cheap city that has the best of all the worlds like we did in Vancouver. Stop talking about your startup and get shit done before you run out oxygen and die.

Jayesh Parmar is the chief executive of Picatic, a platform that guarantees successful events and eliminates 100 percent of the risk for event organizers by completely changing the way people purchase tickets for events. He is a serial entrepreneur who started his first company in 1998.